How to Choose Stocks for Investments: Expert Tips for a Successful Start

The level of life directly depends not on income, but on the ability to manage it. Even a high salary does not guarantee stability without understanding the principles of budgeting, investments, inflation, and risks. Financial illiteracy leads to chronic debts, impulsive spending, and zero savings. To change this, it is important not just to count money, but to understand their behavior — as an asset, as a tool, and as a resource. Why and how should you increase financial literacy? This skill helps achieve goals, reduce stress, build a safety cushion, increase prosperity, and achieve economic efficiency without exhausting limitations.

What is financial literacy: essence

Financial literacy is the ability to make informed and advantageous decisions related to income, expenses, savings, and investments. A person possessing this knowledge can:

• create and adhere to a personal budget;

• plan expenses and incomes;

• avoid excessive consumption;

• save, invest, and diversify assets;

• consider inflation and risks;

• rationally use credits.

This set of skills ensures not only financial stability but also independence from external circumstances. How to increase financial literacy in adulthood: doing this is especially valuable, as the ability allows you to rebuild established habits and gain control over cash flows.

How to increase financial literacy: simple steps

Financial reboot starts not with a course, but with practice. The initial step is a full analysis of the current situation. To do this, you need to:

1. Record all incomes. Include salary, freelance, bonuses, alimony, subsidies — any sources.
2. Create an expense table. Link it to days, weeks, and categories. Specify exact amounts, down to coffee.
3. Compare the difference. If expenses exceed income, reconsider priorities.
4. Set a goal. Creating a safety cushion, debt repayment, investments, education.
5. Develop a tactic. Allocate a percentage for savings, set limits by categories.

Forming the habit of control is the first step towards economic efficiency. Even without deep knowledge, a person who tracks expenses already reduces impulsive spending.

Personal budget and expense planning

A personal budget is a working tool that allows you to allocate money in advance and avoid “financial surprises.” Format:

• 50% — mandatory expenses (rent, food, transportation);

• 20% — savings and investments;

• 30% — variable expenses (gifts, leisure, clothing).

This distribution ensures stability without strict limitations. Planning expenses turns desires into manageable goals. Example: with an income of 60,000 ₽, 12,000 ₽ goes into savings monthly, 30,000 ₽ into mandatory expenses, and the rest — 18,000 ₽. After a year — 144,000 ₽ in savings without much effort. How to increase financial literacy through a personal budget? Create a living document that adapts to changes, not a template.

How to combat impulsive purchases: marketing protection strategy

Impulsive purchases undermine any plan. Effective resistance requires specific techniques:

1. 72-hour rule. Postpone a non-essential purchase for three days.

2. Pre-purchase list. Write down everything beforehand and do not exceed it.

3. Cash only, no cards. Limiting the physical medium reduces temptation.

4. “1 thing — 1 day” principle. Each new purchase requires giving up something outdated.

5. Ad blocking. Deleting marketing emails, disabling notifications.

How to increase financial literacy in this area? Learn to see the price in work hours, not emotion, in a product.

How to increase financial literacy and save money without sacrificing comfort

Saving is not about denial but optimization. Practical examples:

• installing LED lamps — saving up to 1,500 ₽ per year;

• shifting laundry and cooking to off-peak hours — 20% off bills;

• subscribing or buying in bulk — up to 50% cost reduction;

• automation — online cash registers, planners, payment reminders.

Economic efficiency is achieved through small things. How to increase financial literacy in everyday life? Look for ways to spend less without compromising quality of life.

Investing for beginners: how to invest even a thousand rubles

You can invest money even with 1,000 ₽. The main principle is diversification. Do not invest everything in one asset. Plan: 70% — bonds, 20% — stocks, 10% — cushion. The key is to start with understandable steps:

1. Opening an individual investment account (IIA).

2. Buying ETF on the broad market (e.g., Moscow Exchange index).

3. Placing funds in reliable bonds with minimal risks.

Safety cushion: foundation of stability

A financial cushion is a minimum of 3–6 months’ expenses. Example: with monthly expenses of 40,000 ₽, a safe reserve ranges from 120,000 to 240,000 ₽. These funds are kept in a highly liquid account and do not circulate. Forming a cushion is the first level of financial protection. Savings are accumulated funds without risks. Goal: preservation. Investments are assets working to increase. Goal: capital growth. Incorrect mixing leads to loss of funds. How to increase financial literacy: distinguish concepts, form both categories.

Loans and inflation: how to protect against debts and currency devaluation

Loans are a tool, not a trap. A rational approach involves a system:

1. Rate < inflation + 2% — justified credit.

2. Payment < 25% of income — safe.

3. Full repayment before the grace period ends — ideal scenario.

Inflation reduces purchasing power. Example: 100,000 ₽ in 2020 are equivalent to 83,000 ₽ in real value today.

What is this if not understanding these processes? 7 rules on how to increase financial literacy:

1. Track incomes and expenses daily.

2. Create and adjust a budget monthly.

3. Differentiate savings and investments.

4. Minimize loans and control rates.

5. Build a safety cushion for at least 3 months.

6. Eliminate impulsive spending through delay techniques.

   

7. Enhance knowledge through books, simulators, calculators.

Conclusion

Financial stability does not come with a salary but is formed through systematic actions. Money management creates prosperity, even with modest incomes. A personal budget turns desires into a plan, savings into security, investments into growth. How to increase financial literacy: the process stops being a task and becomes a habit.

There is no need to romanticize Wall Street and associate a brokerage account solely with the dream of yachts. It is not a ticket to the billionaires’ club, but a tool for managing personal assets. Through it, capital starts working, and money gains meaning. Financial literacy in action — not in theory.

What Is a Brokerage Account and Why Is It Needed

Every operation in the stock market — whether it’s buying stocks, bonds, or currency — requires an intermediary. This function is performed by a broker, and an investment deposit becomes a technical platform through which all monetary and asset flows pass.

A brokerage deposit is not an alternative to a bank deposit. It is a bridge to financial instruments with potential profitability that can exceed inflation. It is used for transactions on the exchange, where securities of over 3000 issuers are traded — from state-owned companies to startups.

The calculation is simple: the average return on S&P 500 stocks over the last 90 years is around 10% per annum. For deposits, it’s around 6% in an optimistic scenario. It is needed for investing, earning passive income, and working with capital in real-time.

How a Brokerage Account Works

The functionality of the account resembles a personal investment cabinet. Funds are deposited into it, allocated to assets, and participate in trading. Purchased securities are held in a depository, and information about each transaction is stored in the broker’s accounting system.

Access to it is round-the-clock. Transactions are carried out in a mobile application, over the phone, through a terminal. The minimum entry threshold is from 1 ₽. Even with 100,000 ₽, you can diversify across 5-6 sectors and a dozen issuers.

How to Open a Brokerage Account: Step-by-Step Guide

Opening an account takes from 5 to 15 minutes. Documents required — only a passport. Signing up — through public services, electronic signature, or courier. All done remotely.

What is needed for this:

1. Choose a broker. Compare commissions, reviews, licenses from the Central Bank of Russia.
   
2. Register. Complete identification, sign a contract.
   
3. Transfer funds. Via bank transfer or card.
   
4. Set up the application or terminal. Choose a suitable interface.
   
5. Start buying. Choose assets, place orders.
   

Investment platform in the top 3 for convenience:

1. Tinkoff Investments.
2. VTB My Investments.
3. Alfa-Investments.

Commission — from 0.03% per transaction. Deposits and withdrawals — instant.

Brokerage Account for Beginners: Mistakes and Pitfalls

Beginners often make the same mistakes that lead to losses:

1. Ignoring diversification. Investing the entire sum in one company can result in losses with any drop in stock prices.
2. Buying on hype. The rise of Tesla or Nvidia stocks does not guarantee growth after purchase.
3. Lack of strategy. Without a goal (e.g., “accumulate 3 million ₽ in 5 years”), the deposit turns into chaos.

The platform works effectively only with clear actions, calculations, and analysis.

Where to Earn Through a Brokerage Account: Real Scenarios

How to earn on the stock exchange — a non-rhetorical question. Dozens of strategies operate in the market. Several working scenarios:

• Growth stocks: investing in companies with high dynamics (e.g., Yandex, Ozon, Gazpromneft). Potential — up to 40% per annum;
  
• Dividend stocks: stable payouts from large issuers (Surgutneftegaz, Severstal). Income — up to 15% per year;
  
• Federal loan bonds: a reliable instrument for capital preservation. Coupon — from 8% to 12%;
  
• Currency investments: buying dollars, euros, yuan through an investment platform protects against devaluation.
  

Combining instruments allows for creating a balanced portfolio and reducing risks.

Brokerage Account and Taxes: How Not to Lose on Formalities

Any profit through such a deposit is subject to taxation. The standard rate is 13% of income. But the tax burden can easily be reduced with legal instruments.

Example: with an income of 120,000 ₽ per year, the tax will be 15,600 ₽. But with an Individual Investment Account (IIA), you can get back up to 52,000 ₽ annually — with contributions up to 400,000 ₽. This structure makes the deposit particularly advantageous for long-term investors.

Additionally, there is an exemption from profit tax when holding an asset for more than three years — under the “long-term ownership benefit.”

In practice: investing 300,000 ₽ in stocks and holding for over 36 months allows you to eliminate taxes when selling even at a profit.

Risks and Asset Protection in a Brokerage Account

An investment platform does not guarantee profit. Losses can occur with falling stock prices, issuer bankruptcy, currency fluctuations. But risks can be controlled.

Client funds are kept separate from the broker’s assets. Even if the intermediary’s license is revoked, the assets remain under the owner’s control. The depository is an independent structure that records each security.

To protect capital, investors use:

• limits on losing trades (stop-losses);
  
• regular portfolio review;
  
• diversification: including different assets and sectors;
  
• switching to protective instruments during volatility — bonds, currency, gold.
  

With a responsible approach, a brokerage account not only reduces inflationary losses but also helps accumulate capital in a predictable manner.

How to Choose a Broker and Avoid Mistakes

The market offers dozens of companies. Choosing a stockbroker affects not only comfort but also trading efficiency. A difference of 0.1% in commission with active operations can “eat up” tens of thousands of rubles per year.

Key criteria:

• possession of a license from the Central Bank of Russia;
  
• commission size for transactions, deposit/withdrawal of funds;
  
• convenience of the application and the presence of a terminal;
  
• reputation and user reviews;
  
• availability of IIA, analytical reviews, technical support.
  

By the end of 2024, the largest players were Tinkoff, Sberbank, VTB, and Alfa. Each of them provides an investment account with different functionality but guaranteed asset protection. Commissions range from 0.03% to 0.3%.

Who Is Already Using an Investment Platform and Why

According to the Moscow Exchange data, by March 2025, there were over 32 million brokerage accounts opened. However, activity is maintained in only 15% of them — the rest remain empty due to fear, lack of knowledge, or absence of a strategy.

The typical account owner profile is a man aged 30-45 from a large city with above-average income. But with the development of mobile platforms, the share of female investors has increased to 38%, and the average age has started to decrease.

Reasons for opening:

• saving for retirement or children’s education;
  
• passive income;
  
• an alternative to deposits;
  
• protection against inflation and currency instability.
  

A brokerage account for beginners is no more complicated than a banking application. The principles are the same: depositing, allocating, controlling. And the result is capital formation.

Conclusion

The stock market is no longer a closed club. Now, a brokerage account is not a symbol of elitism but an accessible mechanism. It structures the approach to money, disciplines thinking, enables action rather than waiting. Long-term investments, real profits, tax savings — everything works if you engage your mind, not emotions.